According to a recent agri-food sector outlook by the Natural Resources Institute Finland (Luke), there is an exceptionally high pressure to raise the price of food this year, as the prices of inputs required in the food chain, such as energy and fertilizers, have experienced a significant increase. Producer prices for cereals and oil crops have already risen to record highs both globally and in Finland. Prices for livestock production, which has been hit by the higher feed costs, will continue to be under a strong upward pressure towards the end of 2022.
Luke predicts that food prices will increase by up to 10% this year compared to the average price level last year. Meanwhile, food prices are rising faster than the general rate of inflation, which means that the share of food expenditure from total consumption is increasing. Last year, food expenditure accounted for 12.5% of total consumption.
"The rising prices also affect consumers' purchasing behavior, leading them to buy cheaper alternatives in a product group or replace products with something else," says Hanna Karikallio, a Senior Scientist at Luke.
Cereal prices soaring
The prices of cereals and oil crops have soared globally and in Finland since Russia invaded Ukraine. Furthermore, the poor harvest in 2021 has led to a much greater use of stocks than in previous years. The last time production in Finland remained so far below domestic demand was before the turn of the millennium.
Self-sufficiency in the production of almost all cereals in Finland during the 2021/22 market period was close to or even slightly below 100%, which means that stocks are now exceptionally low. The 2022 cereal harvest will be of extreme importance for the Finnish cereal supply and market.
Unlike for cereals, the demand for oil and protein crops has long exceeded the supply in Finland, and the country has been dependent on imports especially in terms of supplementary protein feed. In 2021, more than a third of total soybean-, rapeseed- and sunflower meal came from Russia, and imports from Russia ceased completely at the beginning of March 2022. This import volume must now be replaced with domestic alternatives and imports from other countries, explains Jyrki Niemi, research professor at Luke.
Poultry overtakes pork in terms of consumption
This year, total meat production and consumption in Finland are expected to remain at the previous year's level, but the trends between meat types will vary. The production and consumption of beef and pork are decreasing, while the strong growth in the consumption of poultry continues. This year, more poultry than pork will be consumed, for the first time ever, says Terhi Latvala, senior scientist at Luke.Click here to see more...